BaFin Implements Macro-Prudential Measures and Remuneration Ordinance
As part of recent regulatory developments, the Federal Financial Supervisory Authority of Germany (BaFin) announced that the revised "Solvency Regulation (SolvV)" came into force on September 25, 2021. One of the changes involves the addition of a new Section 36a in the Solvency Regulation to provide the legal basis for calculating the capital buffer for systemic risks. BaFin also noted that the "Institute Remuneration Ordinance (InstitutsVergV)," which came into force on September 25, 2021, implements the fifth Capital Requirements Directive (CRD5). Finally, BaFin issued an order pursuant to Section 48 (7) of the German Banking Act (KWG), which recognizes Luxembourg's loan-to-value limit for private residential property financing.
The BaFin order implements a recommendation that the European Systemic Risk Board (ESRB) published on June 11, 2021. The General Board of the ESRB decided to include a macro-prudential measure for loan-to-value (LTV) limits on the new mortgage loans in the residential real estate in Luxembourg to the list of macro-prudential policy measures that are recommended for reciprocation. The ESRB recommendation specified the legally binding LTV limits for new mortgage loans on residential real estate located in Luxembourg, with different LTV limits applicable to different categories of borrowers:
- LTV limit of 100% for first-time buyers acquiring their primary residence.
- LTV limit of 90% for other buyers (that is non first-time buyers) acquiring their primary residence. This limit is implemented in a proportional way via a portfolio allowance. Specifically, lenders may issue 15% of the portfolio of new mortgages granted to these borrowers with an LTV above 90% but below the maximum LTV of 100%.
- LTV limit of 80% for other mortgage loans (including the buy-to-let segment).
Related Links (in German)
- News on Solvency Regulation
- News on Remuneration Ordinance
- News on LTV Measure
- Order on LTV Measure
- ESRB Recommendation, June 2021 (in English)
Keywords: Europe, Germany, Banking, CRD5, Basel, Remuneration, Solvency Regulation, Luxembourg, Systemic Risk, Macro-Prudential Policy, Regulatory Capital, Residential Real Estate, Credit Risk, LTV, RRE, Bafin, ESRB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
BSP Issues Multiple Updates for Financial Institutions in March 2022Related Articles
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance
The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks
EC Publishes Results on Review of Web Accessibility Directive
The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.
NGFS Report Explores Quantification of Climate Risk Differentials
The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations
MAS Consults on Adjustment Spreads for Conversion of SOR Contracts
The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
